Review: Winning Decisions

Pop Quiz: You have to select one of two competing options. All the information available shows that Option 1 has a 55 percent chance of success. Option 2 has a 45 percent probability of being a winner. You go with Option 1, then watch in horror as Option 2, selected by your largest competitor, soon dominates the marketplace. On a scale of 1 to 10, with 10 being "you made the absolute best decision possible," evaluate your decision to pick Option 1. Pencils down.

If you gave yourself anything but a resounding 10, you don't truly understand how to make a decision. But don't worry, you're not alone.

Or so say business school professors J. Edward Russo (Cornell) and Paul Schoemaker (The Wharton School of the University of Pennsylvania) in Winning Decisions. Their timing couldn't be better. As organizations continue to flatten, CIOs are more frequently making decisions that affect the entire firm. And the rapid rate of change is forcing all managers to make decisions faster.

Given all this, it is worthwhile to revisit one of a manager's most basic tasks: making a decision, something that doesn't get attention except in academic journals. In a clear, straightforward presentation, the authors break decision making into four discrete steps:

Framing or deciding what you are going to decide—and not decide;

Gathering intelligence—real intelligence, and not just information that will support your internal biases;

Coming to conclusions—determining how your company acts on the intelligence it gathers, and;

Learning from experience.

They then walk readers through each of the steps, highlighting key concepts, and providing case studies and worksheets so readers can immediately put these ideas to work.

By providing a detailed framework for how to decide, the authors make an important contribution. When confronted with the need to assess a situation, gather information and reach a decision, most managers depend on a hit-or-miss approach they have developed over the years. They rely on their intelligence, experience, intuition, common sense and training within a narrow field such as IT. While there's nothing wrong with that, it is the absolute minimum an IT manager should do, and doing the absolute minimum never gives companies a competitive advantage.

The alternative approach laid out by the authors allows managers to reframe issues by asking such questions as "What is the crux of the issue that I am facing?" so that they don't end up solving the wrong problem. It also allows them to increase their options by doing such things as "not necessarily taking yes for an answer," when it comes to initial research findings.

However, the authors stress correctly that even improving the way managers go about making decisions won't guarantee success. Executives still have to execute, and luck always plays a factor. As with choosing Options 1 or 2, it is possible to make the right decision—going with the option that had the greatest chance of success—and still not wind up with the result you want. But if you make better decisions, your odds of success are bound to go up. Anything that helps you to do that is worth your time.

Paul B. Brown is editor-in-chief of DirectAdvice Inc., an online financial planning company, and is the author of 12 business books, including Zoom: How 13 Exceptional Companies are Navigating the Road to the Next Economy (with James Citrin), to be published in February.